Open Enrollment During Covid Strains Employers Altering Benefits

Oct. 12, 2021, 7:53 PM

Covid-19 is upending employers’ open enrollment period as benefits plan advisers struggle to communicate with their workers about changes to their fringe compensation.

Most U.S. workers are allowed to elect or modify their employee benefits packages every year around Nov. 1. This year’s open enrollment is different, as businesses roll out new benefits or adjust schedules to meet the needs of a workforce disrupted by nearly two years’ worth of fast-tracked automation, e-commerce, and remote work trends.

Benefits advisers have a fiduciary duty to explain changes they make to employee benefits, but they’re running up against a hard-to-reach workforce as they introduce many of those changes this year.

Benefits have the potential to make or break a company adjusting to the pandemic, said Michael Ruger, partner and chief investment officer at Greenbush Financial Group LLC. The two-month period before yearly benefits such as group health insurance kick in is a critical time, but work-from-home and social distance protocols prohibit communication.

“This used to be a lot easier pre-Covid-19,” Ruger said. “Now employers who spent the last year and a half changing things up are trying to engage employees in a virtual setting.”

Roughly half of employers responding to a Mercer survey last year said they hadn’t ruled out adjusting benefits to help their workers cope with the pandemic. Since then, workforce shortages have led to more unrest, and businesses that were preoccupied with short-term health and safety goals last year are ready to make more permanent changes to the way they help employees balance needs at home.

New telehealth and mental health benefits have taken center stage but some employers have reduced or nixed retirement plan matching contributions, according to the Employee Benefits Research Institute.

Those are often core benefits, and employers must ensure their workers understand what’s changed during the open enrollment timeframe, said Ruger. Failure to disclose benefits changes can lead to future compliance headaches or legal trouble.

‘Clear Communication’

“Regulators are holding employers’ feet to the fire on clear communication,” he said. “They’re taking fiduciary duties really, really seriously.”

Before the pandemic, employers would hold face-to-face personal or group meetings during open enrollment, hand out paperwork, and wait for signatures at the door. It was easy to track down missing documents when employers were all in one place.

Some companies are even looking for outside help to handle open enrollment post-Covid. New research by HTF Market Intelligence Consulting Pvt. Ltd. shows big growth among benefits support software providers who offer an all-digital communications strategy.

“This is a key moment in the year when we have employees’ attention,” said Alex Muehl, senior vice president of customer operations at The Jellyvision Inc., a digital benefits counselor. “If you think of an employee as a shopper, they are in the store during open enrollment.”

Muehl said Jellyvision works with employers who are shifting their benefits strategies during the pandemic. About 98% of those responding to a customer survey earlier this year said they were expanding their benefit packages to include access to mental health, financial wellness, and child-care resources.

“All that change means a lot of noise for employees,” she said. “I think businesses are trying to figure out how to make sure their message gets through.”

To contact the reporter on this story: Austin R. Ramsey in Washington at aramsey@bloombergindustry.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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